Spain Attracts Record Foreign Buyout Interest

Buyouts of Spanish businesses by private equity firms based outside of Europe have reached their highest level ever, outpacing acquisitions by European firms for the first time following an uptick in sentiment towards the country.

There were 17 inbound buyouts in Spain worth $3.7 billion last year, 14 of which were made by U.S. investors, according to data provider Mergermarket. This was a 55% increase in activity and a 30% increase in value compared to 2012 and the highest value and volume of deals on record.

Potential exits of businesses, including Carlyle Group-backed certification company Applus, could push that figure higher, providing a welcome boost to Spain’s M&A market after more than two years of recession, according to people familiar with the situation.

Olaf Diaz-Pintado, head of ­investment banking for Spain and Portugal at Goldman Sachs, said: “As the euro framework was further clarified during the course of last year, the risk premium attached to Spain reduced very quickly and people were left with a landscape that was perceived to be much more attractive in terms of valuation.”

Mr. Diaz-Pintado said there is roughly $100 billion to $150 billion of private equity capital ready to invest in Europe. He said: “If you do the math of how much these funds would like to invest in Spain to achieve the right diversification, that gives you capital to the tune of around $8 billion to $10 billion that could be allocated to Spain. Now that there’s a significant supply with less risk perceived attached to it, that will then fuel more transactions.”

The figures contrast with a fall in Spanish buyouts by local and other European fund managers. Foreign acquisitions outpaced European deals for the first time in 2013, with 15 deals worth $2 billion recorded during the period. This was the lowest number on record and the second-worst year in value terms after 2012.

Carlo Bonomi, a senior partner at southern European buyout firm Investindustrial, said: “U.S. private equity investments picked up two years ago, so they’re two years ahead of most of the European firms from an investment point of view.

“A lot of Europeans are still licking their wounds, especially in the mid-market. Three quarters of the funds have disappeared or are struggling to raise capital.”

Comments (1 of 1)

So, basically, when a country is on the verge of bankruptcy and desolation it means start selling your "assets" to foreigners. I think the USA already has that under control as we have been selling out to other countries for decades now.